Taija Engman CEO

Kuvauspöydällä #neuvottelija-jakso Suomen ohjelmistosektorin lisäarvosta. €20 miljardia+ liikevaihdon saa kertoa vähintään 1x ja #SaaS-yhtiössä jopa 3.2x Translinkin kvartaaliarvomäärityksen pohjalta. @rasmusroiha @TaijaEngman @samimiettinen

@gregisenberg On the contrary, there has been significant discussion for over a year about the introduction and planning of usage-based and hybrid pricing models in SaaS. For instance, refer to studies by @OpenViewVenture, as shared by Kyle Poyar. To better align with customer value and grow.

SaaS as we know it is dying and no-one is talking about it 1 hour ago, Zapier ($5B company) started charging "pay-per-task" instead of only monthly subscriptions When you can align customer incentives with your business model, it's a beautiful thing Bullish.

@Patticus @gregisenberg My experience supports @Patticus . Our Good Sign SaaS for billing has provided for flexible pricing for over 15 years - using data, drivers, rules. Managed services and service operators have priced based on usage. Subscription economy largely not. Change trend is about 1Y old!

Unsure if just clickbait, but this isn't SaaS dying, this is SaaS exploding. The SaaS community has been talking about this exact pricing shift for over a decade. There are even reports on this very topic published annually (some by yours truly)! :) Let me explain a bit 👇 Value based pricing that aligns incentives with business model has always been the goal, because that's the beauty of a recurring revenue model. It's the first model in the history of commerce that bakes the relationship with the customer directly into how you make money. If the customer gets value - they keep paying/sticking around. If they don't, they leave. "Patrick - isn't this how all commerce works?" Absolutely not. Your grocery store can't guarantee that you'll be there next week. There's no direct relationship, so they use hard and soft tactics (coupons and promotions) to bet you'll come in for your milk. With recurring revenue you're in a symbiotic relationship with your customer until they stop seeing the value in your product. Doesn't matter what that product is. It's great for the company. It's great for the customer. "PC - that's cute, but how does this relate to pricing? And why do some people hate recurring pricing?" I got you. Two reasons why Intercom and Zapier's new pricing didn't exist until today: 1. Billing systems suck/sucked 2. Customers hated this pricing until recently Here's how pricing evolved over the past 20-30 years: Phase 1 - "charge per user" days Billing systems succcckkkeddd until recently. You couldn't track usage or consumption of a product, let alone hook that up to a payments product. So how'd we charge? Invoices. But that wasn't the problem - customers also hated the recurring revenue model, because they were getting similar software on a perpetual license (pay once), so why pay on a recurring basis? Recurring software products compromised by charging on a per license/user basis. Less than 10% of products charged on anything besides licenses or features and those were all dev/engineering products (more on that in a minute). But then came - magical value measuring software. Phase 2 - we can measure value, let's charge on it All of a sudden we had software that could measure how many emails were sent, contacts were in a database, or videos stored very easily AND hook that data up in realtime (or as close to realtime as possible) to a billing system. So why not charge based on the exact value?!! Customers hated it. They just got on board with paying a recurring fee, but now they had to get on board with paying based on how much they used? Software used to be unlimited use!?!? Also, how can they predict their costs for finance? Companies comprised by still charging based on usage, but batching that usage - eg. a tier that charges $100 for up to 1k emails, $250 for 1k-2.5k emails, etc. Customers got their predictability and companies got juicy expansion revenue baked directly into their pricing. During this phase we cross into 50% of all companies using a value metric. But there's one major downside - some customers get screwed. Some are forced to pay recurring for something that should be free and is just a feature. Others don't use all the usage in their tier. So we save them with Phase 3 👇 Phase 3 - unpredictable billing Customers warm up to their bill not being the same every month. They realize super crucial apps like AWS and other engineering products are unpredictable, but necessary. They like that they only pay for what they use. But they still want some predictability. Their finance teams piss and moan at them, but they also don't want prices to "get away from them". Companies respond by adding more tiers with different bins of value metrics and some go much more usage based pricing - eg. $500/month PLUS $10/month per 100 contacts. Companies want to go pure usage, but customers aren't quite there and that's mostly because companies suck at giving them predictability around how much they'll use. It's a give and take. But then the dam starts to break and we get phase 4. Phase 4 - the pure value era Customers get comfortable enough and companies get good enough at giving predictability and transparency that you start to see the dam break. Billing systems are nimble enough to handle this with a little bit of work. Shoutout to @PaddleHQ that built a ton of this two years ago. Others will follow and we'll finally have a world of "monthly predictable revenue" versus "monthly recurring revenue." All of the same principles apply. We're now in a world where the vision can be fulfilled. Well - that's it. I'm excited for the next ten years. All of this only gets better and better with AI and all the other magic coming. Thanks for letting me regurgitate a decade plus of studying recurring revenue, pricing, and billing. At least here it's useful. At the dinner table I get no likes for these knowledge drops. :) Happy to answer any questions.

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Creating lovable invoices that provide rich and transparent information is a must for any business that wants to make sure its customers are happy. Read more from our blog! #billingautomation #recurringbilling #customerexperience hubs.ly/Q01Cch-t0

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For businesses looking to grow and monetize through modern usage-based services, ERP systems just won't cut it. ERP systems require the help of intelligent billing automation solution. #recurringbilling #subscriptionbilling #subscriptioneconomy hubs.ly/Q01zJwY10

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